'Great Green Fleet' using biofuels deployed by U.S. Navy

WASHINGTON, Jan 20 (Reuters) - The U.S. Navy formally
deployed its "Great Green Fleet" on Wednesday, sending warships
powered by alternative energy to conduct operations in the
Pacific three years after controversy over the price of
developing new fuels provoked a fight in Congress.

Navy Secretary Ray Mabus and Agriculture Secretary Tom
Vilsack kicked off the deployment in a ceremony at Naval Air
Station North Island near San Diego, saying the use of biofuels
would improve the Navy's operational flexibility while boosting
the U.S. rural economy.

The Navy's focus on developing alternative fuel sources
comes despite a 70 percent drop in oil prices since it first
tested its Great Green Fleet in exercises in 2012.

Mabus told Reuters in an interview before the ceremony that
focusing on energy and energy-saving technology, from
fuel-efficient propulsion systems to LED lighting, gave the Navy
a military advantage.

An amphibious assault ship like the USS Makin Island, which
uses a dual electric-diesel propulsion system, can stay
deployed three times longer than a conventionally powered
vessel, he said.

"It gives us an edge tactically, it gives us an edge
strategically," Mabus said. "It keeps  fuel from being used as
a weapon against us."

Mabus and Vilsack watched as the destroyer USS William P.
Lawrence was refueled at sea with a blend of diesel and biofuel.
The ship is part of a strike group led by the nuclear-powered
aircraft carrier USS John C Stennis.

Other ships in the strike group and throughout the Navy will
receive the biofuel blend over the next year.

Mabus said deployment of the Great Green Fleet was the next
step in a service-wide energy conservation effort that had seen
the Navy cut its oil consumption by 15 percent since he took
charge in 2009 and the Marine Corps curb its use by 60 percent.

Mark Cancian, an analyst at the Center for Strategic and
International Studies and former White House budget official,
said the Great Green Fleet was more about showing symbolic
support for alternative fuels than actual military need.

REPUBLICAN SKEPTICISM

Many congressional Republicans objected three years ago when
the Navy won support for defense subsidies to help three private
firms build biofuel refineries. With oil now selling around $30
a barrel, that skepticism remains.

"They have not changed their position, which is that these
are too expensive and not needed," Cancian said.

The Defense Department uses about 14 million gallons of fuel
a day, with the Navy responsible for about a quarter of that,
according to figures from the Defense Logistics Agency.

When the Navy first tested biofuel versions of marine diesel
and jet fuel in 2012, it spent eye-popping sums for small
amounts.

In one case, it paid $424 a gallon for 20,055 gallons of
biofuel based on algae oil. To test the Great Green Fleet in the
summer of 2012, it spent nearly $27 a gallon for 450,000 gallons
of biofuel, later mixed into a 50-50 blend. The $15-per
gallon-cost was four times that of conventional fuel.

The fuel for the Great Green Fleet deployment over the next
year is a competitively priced blend of 90 percent diesel and 10
percent biofuel made from beef fat, Navy officials said.

A California firm, AltAir Fuels, is contracted to supply 77
million gallons of the fuel between Oct. 1, 2015, and Sept. 30,
2016.

The Navy pays $2.05 a gallon, thanks in part to a subsidy of
15 cents a gallon from the Commodity Credit Corp, a
government-owned enterprise that supports farm products.

To boost production of alternative fuels, the Navy has
awarded $210 million to help three firms build refineries to
make biofuels using woody biomass, municipal waste and used
cooking grease and oil. The U.S. Department of Agriculture is
providing an additional $161 million in crop supports.

The refineries are expected to begin operations this year,
with full production not likely until 2017.
(Reporting by David Alexander; Editing by Peter Cooney)